Why Auction Mechanics Keep Online Game Players Bidding

I called property auctions for twelve years, a little over three hundred of them. The thing that surprised me most when I started was not the speed or the noise, but how predictable bidders were. The same patterns appeared every week: the early jump bid, the slow creep in the middle, the last-second hesitation, the bidder who keeps going long after the price stopped making sense. Years later, when a nephew showed me the auction house in an online game he played, I recognised every one of those patterns on his screen.

Online games use auction systems to trade items between players, and game designers have studied what keeps players bidding very carefully. Understanding those mechanics says a lot about why real property auctions work the way they do, and how to stay sensible in one.

How auctions work inside online games

Most large online games have some kind of player market. The design varies, but three models are common:

• Timed auctions with a buyout price. World of Warcraft's auction house worked this way for years. Sellers set a starting bid and an optional instant buyout price, and the auction ends after a fixed time.
• Order books. Games like EVE Online and Old School RuneScape's Grand Exchange match buy and sell orders automatically, more like a stock market than an auction room.
• Live bidding events. Some games run special auctions for rare items, with all players bidding at once and short extensions if a bid arrives near the end.

That last model, the live event with extensions, is the closest to a real property auction. It is also the one that produces the most emotional bidding.

The mechanics that keep players bidding

Small increments

Games often set a minimum increment, a small amount each bid must add. Small steps make each bid feel cheap, even as the total climbs. Real auctioneers use the same tool. Early in an auction I would accept bids in steps of 5,000. Near the end I would happily accept 1,000 or even 500, because a small step keeps a hesitant bidder in the room.

The anti-sniping timer

Many games extend an auction by a minute or two whenever a bid arrives in the final moments. This stops "sniping" and gives every bidder a chance to respond. A live auctioneer does the same with the familiar "going once, going twice" and a long pause. That pause is not dramatic flair. It is a deliberate invitation to bid again.

Visible competition

In games, players see that other people are bidding, sometimes with names attached. Seeing a rival makes people bid harder, because the auction stops being about value and starts being about winning. In real auction rooms, bidders watch each other closely, and a confident rival can push the price well above what anyone planned.

Sunk effort

Players who have spent days farming gold for an item feel they must win it, or the effort was wasted. Property buyers who have paid for surveys and legal checks before an auction feel the same pull. I watched many people bid past their limit because they had already spent 2,000 on preparation and could not face walking away.

What gamers already know that property buyers forget

Experienced online traders develop discipline that most first-time auction buyers lack. A few of their habits are worth copying directly.

1. Know the market price. Good traders check recent sale prices before bidding on anything. Property buyers should look at recent sales of comparable homes on the same or nearby streets.
2. Set a maximum and write it down. Serious players decide their limit before the auction starts and walk away when it passes. Write your real limit on paper and bring it to the room.
3. Expect another chance. In games, the same item comes up again. In property, another house will too. Missing one is rarely the disaster it feels like in the moment.
4. Watch the fees. Game auction houses charge a cut. Property auctions carry buyer's fees, legal costs and taxes. Include them in your maximum, not on top of it.

Where games and property auctions differ

A virtual sword and a house are not the same purchase, and the differences matter.

• Binding contracts. In many property auctions, the fall of the hammer creates a binding contract on the spot, often with a deposit of around 10 percent due immediately. There is no cooling-off period. Game auctions have nothing comparable at stake.
• Due diligence happens before. All surveys, legal checks and finance arrangements must be completed before you bid. In a game, you can inspect the item after buying it.
• Reserve prices. Most property auctions have a hidden reserve below which the seller will not sell. Bidding can stop below it and the property is withdrawn.
• Real consequences. Overpaying in a game costs some gold. Overpaying for a house can cost years of extra mortgage payments.

A practical method for staying calm in the room

From the rostrum, I could usually tell who would overpay before bidding started. They arrived late, had not read the legal pack and had no number written down. The buyers who did well looked almost bored. Here is what they did, and what I would advise anyone attending their first property auction.

• Attend two or three auctions as a spectator first, as you would watch a game market before trading.
• Read the legal pack in full, or pay a solicitor to read it, at least a week before.
• Have your mortgage offer and deposit ready.
• Write your maximum, including fees, on a card. Hold it.
• Bid clearly and confidently, but stop the moment you reach the card.

For sellers, the same psychology applies in reverse, and auctions can work well for the right property. We look at that side in Benefits of selling your property via auction.

What I took from watching game auctions

After my nephew showed me his game's auction house, I spent a few evenings watching it. I saw an item listed at a fair price, two players start bidding, and the final price reach nearly three times the usual market value because neither wanted to lose. I had seen exactly the same thing with a two bedroom terrace in a market town, years earlier, which sold for about 30 percent over any sensible valuation because two families fell in love with it on the same day.

The game version cost the winner some virtual gold. The real one cost the winning family a great deal more. If you play online games with auction systems, you already understand the forces at work. Bring that awareness into a real auction room, along with a written limit. More on selling and buying strategies is in our Selling section.